Establishes a publicly available database of business entities in the state that enter into procurement contracts with procuring entities in the state

◆ The sponsor's argument

Why Jabari Brisport says this is needed

Transparency in public contracting is vital for protecting the public fisc and public trust. Anonymous shell companies are used to mask the identities of their real, controlling beneficial owners. Often, layers of shell companies are utilized to further confound the normal task of "following the money" when investigating corruption or crime. This makes anonymous shell companies, like LLCs, the perfect vehicles for financial crime and corruption. Three in four grand corruption cases involve anonymous shell companies, according to a landmark study by the World Bank. By masking the identities of criminals and tax evaders, shell companies inhibit the ability of law enforcement agencies, journalists and other civil society actors to investigate, expose and punish illegal activity. Corruption schemes can utilize government contracts to conceal illicit money flows, and anonymous shell companies can facilitate this by making it difficult to see who the real winners of the contracts are and where the money goes. This practice harms small businesses, who rely on fair and transparent procurement practices. It also undermines the ethics of procurement, which must be fair and open to ensure these deals are based on prior performance, best value for money, and in the interest of the taxpayers, Beneficial ownership transparency makes it difficult it will be for corrupt individuals to hide. Combining open contracting data and beneficial ownership can make it easier to detect corruption and money laundering risks as well as deter fraud. The issue has rightly attracted global attention, with the G8, the G20, and the Financial Action Task Force all supporting the disclosure of beneficial ownership information. The UK, Canada, and dozens of other countries around the world require beneficial ownership information to be publicly disclosed. In 2023, New York passed the LLC Transparency Act. Although this law was a major step forward in beneficial ownership transparency, and will undoubtedly help the state crack down on finan- cial crime, money laundering, and corruption, it does not require public disclosure of any kind. This legislation would create public transparen- cy around public contracts, which is necessary to ensure these processes are free from corruption and undue influence. Because the necessary beneficial ownership information is already, being submitted to the Department of State under the LLC Transparency Act, the burden of publishing such information is minimal.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.